The price of oil in the US has reached over $90 a barrel for the first time in 10 months, which may lead to higher gasoline prices and increased inflation across the economy. Despite the end of the summer driving season, gas prices have continued to rise, with the national average for regular gasoline reaching $3.86 a gallon. This is six cents higher than last week and 16 cents higher than the same day last year.
The recent surge in oil prices can be attributed to concerns about supply. Saudi Arabia and Russia surprised the market by extending their supply cuts, and catastrophic flooding in Libya raised fears of supply disruptions in the OPEC nation. Libya, a key supplier to Europe, produces around 1 million barrels of oil per day. If this supply were to be taken off the market for an extended period of time, prices would be forced even higher.
The rise in oil prices has also had an impact on central banks’ efforts to combat inflation. Recent reports on inflation showed that prices rose more than expected in August, largely due to increasing gas prices. Energy prices have continued to climb throughout this month, undermining the progress made against inflation.
As a result of these developments, several US states, including Colorado, North Dakota, and California, are now experiencing regular gasoline prices of $4 a gallon or higher.